Surprise: Earnings from Sri Lanka Telecom Revenue Commission decline

For several years, the Telecom Regulatory Commission has been the biggest contributor to government revenues. It continues to be biggest in 2011, though it has come down considerably in 2011 from the massive yield in 2010, according to the 2012 Fiscal Management Report.

In 2010, TRC contributed LKR 13,800 million, 44% of total revenues from government enterprises. In contrast, all the state banks combined contributed LKR 5,315 million, 17% of the total. The Port (26th largest container port in the world) yielded nothing, zero. The airport contributed LKR 300 million (1%).

For 2011, the Report gives estimated numbers: TRC LKR 8,000 million (31%); all state banks LKR 7,159 (28%). The surprise is that the TRC’s contribution has declined by over LKR 5 billion.

For those who wish to convert to USD, today’s exchange rate is USD 1 = LKR 113. So TRC gave the government USD 122 million in 2010 and 71 million in 2011. Not a bad return on the few million spent on reforming the telecom sector!

Could you provide some insights as to where the TRC generates these massive revenues from? Is it mostly from recurrent sources like the Telecommunications Levy, or are there some one off revenues like income from spectrum licensing included here? Just curious to know how sustainable this level of revenue generation might be.

Interesting, if the income of TRC is more than its expenditure then may be it should give some relief to telecom sector. Regulators should be getting the cost of regulation and not to act as revenue collectors for government.

This is not the telecom levy. Those are pass through taxes collected by the industry for government.

Sri Lanka never auctioned licenses. So their upfront cost was low. Each license contains a percentage of Adjusted Gross Revenues they must pay. In addition, there are spectrum charges. The latter were raised by multiples of 100 in the past few years. These funds accumulate in the TRC account. The government has been taking from the TRC account, starting from the 2003 or 2004 Budget. Started at LKR 2 billion, but in 2010 it had gone upto LKR 13.8 billion. How much the government takes has nothing to do with the health of the industry. It is dependent on how much the government wants and how much is in the TRC’s Fund.

A regulatory agency has no “right” to any funds. If this was the case, the incentives would go wrong. It should get a budget approved (how is a different subject) and live within it. Additional amounts should go to government.

In Sri Lanka, the government is getting by this means, what it did not get through auctions.

IT is indeed a rather surprising situation depicted by the TRCSL results. The Dialog and Mobitel have have grown revenues by 10% over the 9 months compared in 2010-2011 which would mean a corresponding growth in TRCSL revenue further the Telecom levies are at 20% during the financial year 2011 from MSL from a lower rate of MSL in 2010, on this backdrop wondering where the pinch has come from to the TRCSL,, anyone got an idea ?

Pg 23 of ‘Fiscal Management Report ‐2012’ says this – ‘Meanwhile, the Telecommunication Levy, which is a composite levy applied on telecom services by
removing various taxes on it, generated Rs. 13,410
million during the first nine months of 2011.’